tv Street Signs CNBC October 23, 2012 2:00pm-3:00pm EDT
mini? >> you know, i think i would. fits in a purse nicely, ty, i'm a commuter now going to the nyse. >> that will do it for "power lunch." "street signs" begins right now. hello, welcome everybody to street signs. we are live on both coasts today for the two big stories of the day. first of all, right here in new york, the major market selloff, dow down sharply on track, for the first october loss since 2008. the second big headline that we have been following here on cnbc is apple, of course. brian sum van, my co-host, is outside the big convenient. over to you, brian. >> it is a big event, mandy, thanks very much. but also a big event about making things a little bit smaller, right? you say good things come in small packages, apple is hoping that. they moments ago unveiled the ipad mini. what they are saying is this is no regular, smaller tablet.
tim cook taking some pot shots at the competition, noting just seconds ago that the display on that ipad mini is 35% larger than the competition. we also had a new version of the full-sized ipad released that they claim is faster around has longer battery life. other than that mandy, what we have gotten are a new 13-inch imac computer and tim cook noting ipad sales outpaced all pcs in the laptop market and theism pad has a 91% market share in web surfing on tablet to computers. and get this they have sold their 100 millionth ipad, still waiting on pricing. i will be here all hour, just for the "street signs" crew, still waiting on that and maybe that extra apple one more thing they have become so famous for. but so far, apple stock, moving a little bit lower, maybe concerns about the sales pace. i'm here all hour. back to you. >> indeed you are, a day of
gifts today from am, the true holiday shopping season not even begun. okay, get you right down to the markets, we have got bob, we have got rick, we have got lots of people the course of this hour standing by to follow. what is going on. bob, give us your take on what is to blame for this selloff? >> argue in some sense mr. bernanke perhaps not doing a third term discussed in the new york times is a factor. to me, it is earnings. dow jones industrial average 26r, 260 a low. a risky thing to play that in my opinion. so now earnings slowing down, revenues definitely slowing down, the rally is over, forget about t nit. cost reductions continue with the companies. slowing growth, i don't hear anybody talking recession in the u.s. slow growth likely in china and the u.s. fourth quarter guidance is
conservative, likely in the fourth quarter like they did in the third quarter, buy on the dip so far worked for the whole year. certainly since the bottom in june. remember, the most successful trading strategy of the year, what's number one, don't fight the fed. only saying, everybody wants to sell everything now, think it's over, just consider these factors before you do that. >> don't count the fed out just yet at this stage. intel about microsoft, only gain on the dow. rick santelli you just watching yields, particularly on the ten-year fault. to what extent are people fleeing to the safety or perceived safety of bonds? >> two-day chart of tens, up yesterday, down about five basis points today. it equaled out. if you consider that the day before the last two-day fed meeting, which is september 12th and 13th, at 175. we are basically at the same place we were before qe 3 was formally announced. what does it mean? means interest rates are down a bit today, most likely because stocks are down but i think we have added a new cliff.
we have obviously the fiscal cliff, the european cliff but today we have the monetary cliff. following the fed or dornt fight the fed, there is an assumption there the fed is an ongoing force of consistent behavior. as we all learned, the natural today's paper mirroring what traders are talk b that is if you are following the election and mitt romney seems to be doing better, that might not be doing better for mr. bernanke with regard to serving this term out and another term that starts in 2014. >> you were on street signs on october 9th and you were very bullish, calling for the s & p to be at 1600 by the end of the
year. are you courageous enough to sometime stand behind that? >> mandy, absolutely. thanks for having me again. i do think that we are having a little bit of obviously of a pull back here and we have a lot of weighing going on in the market for a couple of different reasons. one of the big factors, we have investors buying a lot of protection lately. the vix bouncing 27% off of multiyear lows in the last week and a half. we have a lot of people sitting here and buying put protection on the market post election, a big uncertainty. the market hates uncertainty. vick absolutely right what is going on as far as the fed chairman tornld the market does not like uncertainty out there. once we get past the election, once we get past the cliff talks, market's probably off and running in december, you know what fedex sees a pretty darn good holiday season coming up, retail, probably going to lead us through the end of the year. >> boil it down. just numbered a lot of things going to make someone's head explode, things potentially to worry about. what point would the s & p be a
buy for you? >> i tend to think that you know what sitting here looking at it right now, mandy, continue to have a little bit of a pull back probably going in toward the election now. we have got an a lot of s & p earnings out of the way, factors of a lot of bad news got built n i tend to think right before the election, you will see a lot of vulture buyers coming in to buy this market, some of the protection off of the options markets, probably right when you will start bottoming. >> stanley, brian sullivan in california. are you still calling for a correction or a major downturn in the equity markets? >> i think we are on the precipice, perhaps. it depends on support. looks like we are certainly challenged. what i wonder is the freak reallied swan patched with all the problems collectism kind of coming into view and shift hug the sent? sure seems like it's starting to >> i know what the black swan is, right, besides being a bad movie. what is the freak.ed swan? >> the freckled swan is like the
cartoon with the suitcase with the patches of timbuktu, hawaii and paris and all the places you've been. the freakckled swan has the problem of the known problems. look at median incomes down to 96 levels, people are stressed, the eurozone is still far from finished. look at today, spanish olive oil exports down 58%, production down 58%. that's just not normal. if people get this idea top line we are seeing on the revenue side slowing down, is momentum slowing despite the massive intervention on the central bank's part? >> talking of the massive intervention of the central banks, has bernanke put his confidential in the bernanke put, dave, been lost? >> i wouldn't stay has been lost but definitely about jarred a little bit. one of the factors people are talking about is -- >> david --
>> not going to stick around -- >> sorry, i got to jump in, it is brian sullivan. guys i have got to jump in, my apologies, why i'm out here now, $329, what the ipad minute nirk the smallest version, 16 gigabytes, will run, 329. some of the blogs were correct. gene munster, who i spoke to about an hour ago before he walked into the event hopefully join us on "street signs" when this ends, was concerned about any price point for apple over 300 because he thinks it may cannibalize more than he already expects it to, the larger ipad because consumers walk in and make the decision, 329, i will spend a bill more and get full size. 329 for the 16 gigabyte version. the smallest version of the normal sized ipad, mandy, still at 499. again, my apologiz for jumping in but it's why i'm here. david, i want to ask you, can apple save the stock market? they are 18.9% of the nasdaq 100, 4.9% of the s & p 500, can
apple itself drag this market up? >> i hope it drags my p.a. up, brian, i'm long the stock and absolutely think we have got a great shot. you know what's really interesting, one of our analysts call it this morning before the apple store went down, raised prices on generation two and three ipads, i don't know if they started talking about pricing again for the old ipad, i'm in front of the camera not the tv. maybe that is the way them try to cushion some of the cannibalization going on. we have earnings coming out on thursday night for apple, a buy the news, given the way the stock has been acting going into it, as soon as we get more clarification you especially if prices are going up. brian, at the end of the day, how many tech companies might be raising prices in this environment? >> a fair question. one i can't anticipate. does apple matter that much to the market, stanley? your thesis about a pending drop in the stock market? >> i think apple matters a great deal and in terms of the fed,
look, the bernanke put lasted half a day the next morning so far, we got the high and since then, six weeks, seven weeks later, we are down. the problem that apple faces and mr. munster alarmed about it in terms of operation, on the one hand, they can't cannibalize what the product line already is. on the other hand, the margin comp press and the operating margin, which apple has been far and away the leader and probably the best part of the apple story, gets compressed when you have to compete on price. and this is the real world. the real world is the consumer continues to be stressed and qe stress the consumer even more because it tends to spike food and energy and all else is discretionary income for everything else, including ipad minis. >> i want to mention bouncing around the lows of the day for apple, when you consider it has come a long way, off 705 bucks, its record high on september 25th. i know you said a moment ago,
you are long am. why do you think the stock is down on all of these announcements? do you think a lot of this was already factored in and there's no -- no -- no real excitement, nothing particularly that wasn't expected? >> well, you know what, i think that we are seeing what was relatively expected by the street. we are starting to see some concerns about margin compression. and you know what the street is trying to sell stocks having margin compression and rotating toward margin expansion. the entire pc chain absolutely bludgeoned. you see charts on intel and charts what is going on in pcmakers like dell. the whole area used as a massive source of funds, mandy, rotating into the transports, the transports outperforming the market now. last time i checked, they are up 50 bips. containerized goods coming into this country at a prerecession high. prices going up for shipping, you know what, starting to see fedex getting confident. the tricks acting better and shipping companies raising prices. there's not a lot of signs of the big u.s. recession going on
here. one of our lead analysts, barry banister says u.s. sitting here in q 3 2012. china is a few years behind that big data out of those guys. >> mandy, i think i might be able to answer your question to david as well. con gillis, bgc partners, according to am saying they sold 100 million ipads so far that would imply they sold about 16 to 17 million in the third quarter. which would put the sales rate in the third quarter below the current consensus for ipad sales. not as much disappoint. >> could be the refresh cycle, guys, you are right. >> we got to leave it there, guys. reiterate that munster, he will be on our show later on today along with paul reynolds from
"consumer reports." let's get a market flash, find out what is going on out there in stocks world with kayla tausche h. >> we are watching shares of wells fargo down amid the broader market, which is being led down by the financial sector. all bank stocks trading down today. wells did spike a little bit earlier off of its lows and that was on news that announced a 22 cent dividend and increased its share repurchase program by 200 million shares. by today's price, roughly $7 billion. but still not enough, mandy to lead wells into the green today. >> indeed. just another quick look at the markets, we are having our worst day on the equity markets since early september and commodities, including crude. we will talk more about that following those down. okay, the apple event starting to wrap up, get back to brian sullivan in a second to find out exactly what more we are hearing, hopefully there will be more. collateral damage. why america might not have anything to do with today's selloff. a theory on what is really
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various headlines out of the middle east being trumped by concerns about the global economy slowing down. over the course of one week, crude has dropped 6.5%, today, down 2.7, currently sitting at 86.25, wti. bets let's get out to san jose and you find out with brian sullivan what more is coming out of the apple convenient. we had much. what more do we get?
>> i know what sells coming out of the apple eventself be inside the apple convenient, mandy, because it just ended. cue the van. you were killing it. what surprised you? what excited you? what disappointed you? >> the macs were interesting, straight to the ipads first. the big surprise, they did refresh the main ipad the middle of the year, just about seven months after the original one, got the lightning connector, got new chip in it. this is a big move. >> surprising, too? >> surprise. >> i think people thought ipad mini but the normal price of the ipad, disappointment. two separate ipads unveiled today? >> yes. and it's a differently engineered full-sizedism pad. also hurricane the ipad mini,
interesting about that, they really made the case this is bigger and better than the seven-inch ipads out there. until i get my hands on it and other people do we don't know whether that holds up or not. but they are really positioning this to try to make the ipad a much bigger franchise overall. they want this clearly to be a flagship sort of device in and of itself. so it's more of the ipod nanomodel than the mac minimold, as we were talking about earlier. >> big numbers, 100 million ipad sold so far, disappointed some people. >> i was hearing that inside. yes. >> how many millions of downloads of ibooks. how many billions of apps bought and sold. >> one thing i would caution about that ipad number, we don't know how am was rounding. i think we need to be careful about that. >> a great point. that's why the stock -- stock is based on its lows of the day,
john, and colin gillis saying because it looks like there is expectation maybe they could be a little light in ipad sales. you think this is key, guys, pay attention, you think could be a case of am saying 100 million? >> i don't know. i don't know. i'm just saying 100 is a really round number. so you know, did they say 100 when they could have said something -- >> six weeks ago or did they say two, how did they do it? did they say that the 100 million was sold two weeks ago or just weeks ago? that would sort of figure out the run rate for sales for stock? >> that is important. i don't -- you know, i don't remember exactly what they said. that's why i want to couch that i want to be careful bin ter bretting that 100 million. but someone in there, an analyst -- >> is this product enough for you to drop the handspring or palm pilot that you're currently using now, to trade up to the am ipad mini, 'cause that is the litmus test, right? you have an abacus on your des
he can. >> i am the ultimately the muss test because i'm the ultimate luddite. i think that might be enough. i like the idea you can hold it in one hand but i also want to mention from back here at hq, you can't seeker the stock is now down about 2 1/2%, just listening to you guys here and mentioning with you some of the folks areas of disappointment that came out of the event today, probably why the stock selloff is now down to $618. >> john brought up an excellent point in the e-mail, really going quickly back and forth. >> yep. >> if the fourth generation ipad, jon, has the new connector, right, which is that smaller connector, called lightning. all you need to know is it's smaller. >> smaller. >> if the new ipad has that, why would i buy the third generation ipad with the old connector if i'm starting to upgrade everything? >> when i listen to you guys, i'm thinking cannibalization. is that what comes to mind for you? >> well, it's -- >> hello? >> yeah. mandy.
yeah, i think you brought a wood good point, cannibalization. as they said in inventory, jon, a house cleaning compressing margins? >> depends how me they manage inventory. i didn't see analyst notes out saying there was a draw down in ipad inventory before this doesn't mean there wasn't a draw down. i didn't hear people talking about it. it is interesting what do they do with the ipads already made with the old connector that are selling for $500 now? can they sell them for $400, the ipad 2 sells for $400. >> ship them out to australia, ship them out to the colonies. bring in paul runnels, "consumer reports" electronics editor. give us your score out of 10 in terms of what was unveiled today from apple? >> i don't know about a score out of ten. i will say i think the ipad miniwas very close in terms of specifications to what we expected from the rumor mill. the real surprise there was the price and i think that the price
is why we did know. that 329 price, i think the consumer perspective on that is yes, it's bigger than the seven-inch tablets that am was comparing it to and it is an ipad and it has the advantages that people like, all of those apps and everything. but we are now in a marketplace whereseven-inch tablets, out now or coming up, are 200 to 250 for a 16 gigabyte capacity model, things like the nexus 7, the new nook hd tablets coming up. so you know, the question is will people pay that much more for something like that? >> palm what do you think? it is brian sullivan s 329 too expensive? >> think the key is are people willing to pay that, you know? how much do people want a smaller ipad? i think in this market, a lot of people may just be looking for a
tab, let the difference in price for some consumers, at least, will be significant to be able to go down to $200 or so for some of these 7-inch tablets may think they are big enough. even though they don't have the apple features, they are looking pretty good as far as specifications go. >> okay. just to reiterate, the stock is currently down 2.5%. quick question to you on the question of price, i mean, originally when people were thinking about the under $300, paul, wore trade might hurt margins but saying at the same time, they have to prevent rivals from becoming more dominant in that space. so at this price, do you think the margins are really almost and truly intact and not going to be concerned about that anymore? >> i don't really know about the margins but i do think that we are going to get a fair amount of buzz starting the end of this week for things like that nook hd and also there's a larger barnes & noble nook hd coming out, 8.9-inch model, that is
going to be less expensive than this 7.8 something inch ipad so you're going to be able to get more screen, albeit, not an ipad, for less money than this device costs. >> got it. thank you very much, paul. one look at the selloff and you can see why a new survey says 70% of middle class americans are not confident in this market. so, how can you keep your confidence in the market? going to bring some answers for you next.
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quest, executive vice president of wells fargo retirement and trust. great to have you on the show today. we often talk about a fiscal cliff but you're seeing a retirement cliff facing a lot of people today. and when you see a market selloff like this you can understand why some people would be jittery to invest. >> they are and they are not confident. what we have seen is a drop in confidence from last year and mainly because they are worried about paying their bills. retirement does not go to the top. saving for retirement was only 16% of their top financial concern, compared to paying the bills went from 37% up to 52%. so, they are concerned and they are concerned about the market. 70% not confident in the stock market. >> but why? what was the main reason given into? feel is not a level playing field or feel they can get better returns elsewhere? >> i think some don't know and they are reacting to what they have been through the last few years. we really saw that with those in their 20s. 82% would not put money in the stock market. and those are really the --
those are the individuals with the long runway and they should be looking at the equity markets as a possible place to invest. >> do you feel a lot of people are just kind of guessing about what they will actually need in the future? it feels when i was looking at the stats here, just doing a back of the envelope, might need this amount and completely wrong in terms of what they want to live on and what they need in terms of health care costs as well? >> 75% said they had guested at the amount they needed for retirement and guessing is not very good. they said they would need $47,000 for health care. we know probably going to need about $260,000. their way up. how long are they going to spend that money? 20 years but take 10% out every year that math does not add up. >> thank you very much for joining us today. of course, i guess if you are thinking longer term, retirements, dips like this could be a good buying opportunity. next, we head back to brian in san jose, gene munster is waiting in the wings, want to hear what he has to say.
brian? >> all right, mandy, thanks very much. we are joined by our own jon fortt, as well as gene munster from piper jaffray making a trip west here. we talked about the so-called bernanke put in this market. do we have the tim cook call? why are apple shares down 16 bucks? >> i think the bad news today it looks like they were a little soft on their ipad number for the september quarter, probably somewhere between 15 and 16 million. the street was somewhere between 17 and 18 million. so i think that's small related to the more important news today, the announcement, probably why the stock is a little soft today. >> gene, i'm wondering, is it possible they just sort of rounded here, 100 is a nice number, instead of saying 103104, 105? could we be reading too much into that? >> could be. did say they crossed that 100 million number two weeks ago. put you around october 7th, something like that i think that probably the math seems pretty solid in this case. >> you and i talked before we
went in you expressed concerns. you wanted to see the ipad minipriced below 300, 299 for fear it will cannibalize the full-size ipad. >> we were hoping for 299. i think that psychologically, 2919 a little better than 329. still in the ballpark. i think the broader theme is this is a new market they are getting into. solidly within that market. psychologically not what we were hoping for but the product itself is more impressive than expecting. >> do you change your rating or price target on the stock because of the news you heard today? >> this doesn't impact how we feel about the ipad. ultimately, we feel next year, despite what we saw with the ipad number today, we think an inflection point. keep in mind, when they come out with new form factors that could cause a significant impact for demand. >> you were working so hard crunching numbers, this is what happens when you really just putting pen to paper or when you don't show up for your cnbc hit on time. i'm going to call an audible, peyton manning, jon stick around as well, we have talked about whether this 329 number will be
too expensive. we are sitting here theorizing about it why theorize about it? a crowd of people here been here all day, great, could we get a couple people to come over here, i want to ask your opinion about the -- here we go. >> spontaneous vox pops. >> national honor society or he just purchased that shirt what is your name? >> brian. >> great name by the way what is your name? >> nick. >> nick? okay. guys. so, future of america, right? 329. is that too expensive for you on the ipad mini? would you buy it? >> i would buy it personally. >> do you have an ipad currently? >> no i do no. >> an iphone? >> no. >> so you would be a new apple customer? >> yeah. >> you are what gene wants to see? >> mm-hmm. >> so, why would this lure you in? >> the ipad was a little teak spence sive for me but the ipad mini perfect. >> 329 not bad? >> i like t. >> nick, document have to go with this guy here h you look smarter. what do you think? >> 329 perfect. >> are you an ipad owner? >> no. >> ipod owner.
>> i phone. >> you are in the hail flow was the ipad the original one to brian's point, simply too expensive for you >> 499 was too much. >> all right. so, a sur acres have mandy, our highly -- our highly scientific cnbc survey shows 1,000% chance that they will get new customers in, which to a point is what gene wants to see and as you know from live tv, cue the bus. whenever we go on tv, got to have a large diesel-powered truck drive by brian and nick, hey, thanks for joining us. thanks for hanging out today. >> fantastic. great to pull them in there i want to also bring back paul reynolds of "consumer reports" who has been patiently waiting by and listening to us at the same time. we really like to know what stops apple from its run? i mean, at what point, for example, does it run out of new and exciting innovations to excite us all? i mean, what's going to be the obstacle that breaks its back? >> that is a good question. so far, they have been able to
keep up the momentum to a large degree that they had during the steve jobs era. i think that moving into the smaller screen size on the -- on theism -- the ipad miniis a smart move. we heard from some of those people, probably albeit apple ennews yases, getting the lower price point for some people is going to bring them in where 499 was an obstacle. this helps keep their momentum going offering new products albeit maybe not as innovative an announcement as we have seen in the past from. they but it does keep -- >> we have still got gene munster here. i tell you what, this 329 price point on theism pad minireminds me of the ipod days when people said, look at apple's ipods,
more expensive than other mp 3 players out there. that turned out not to make that big a difference. people off the street who don't own kindled, not saying, $100 more than a kindle fire. what do you think about that price point based on thinking about it for a couple more minutes? >> probably making too big of a deal, the difference between 299 and 329, the reality is this is a big step difference. i think also if you look at the difference between google's nexus 7 and the tablets, it's a bigger screen and so i think that, you are know, for $30 more and that big of a difference on the screen, i think that people are going to ultimately get on board with this. this is going to really launch them. >> i know we got to go a great point. have we not talked enough about the risk to google's nexus or the kindle or the nook with this announcement, too am focused and not enough who they might be taking share away from? >> bloom perspective you don't have to a share in the smaller market, expect they will have 50% share next year.
i think it's things like the kindle fire around some of the other android tablets, they will lose share no way they can't. >> i want to talk more about what happens to those folks sell egg at zero margin if they get stuck with inventory. talk about that before the event. >> i'm glad you brought up the competition. obviously but to launch into major holiday shopping season, all those companies will be vying to get their devices in people's stockings and on holiday shopping lists. going to get back to those guys in just a second. the meantime, oil prices are tanking today, taking oil stocks with them there are benefits, like lower gas price. you might be surprised to see how far gas prices have fallen in just the last week. that is good for us, right? more money in our pockets. we will have that for you next. . you have to dig a little. fidelity's etf market tracker shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend. i'm stephen hett of fidelity investments.
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no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners. i'm bill griffeth, on closing bell, full team coverage of today answersings-fueled selloff and one of our guests says this market could be in trouble because the fed can't help them on this one, can't print earnings. one stock rallying today coach, the best-performing stock inside the s & p 500 today. ceo lou frankfurt is here exclusively to talk about earnings that did well in the latest quarter. the author of the explosive new book "yes left goldman sachs" is
with us today. goldman calls him disgruntled. greg smith, though, disgruntled or not, will be telling his side of the story with maria coming up. we look forward to seeing you at the top of the hour. the last hour could be very interesting, man kim. see you then. >> nearly always is. thanks very much, bill. an update on what the markets are up to. keep in mind, the dow is up 6% since june. today, it is experiencing ing al back, today, the drop of 215 points shaping up to be one of the worst days on the dow so far this year, the biggest decline for the dow, 274 points, guys, june 1st. at this stage, intel and microsoft the only two dow gainers. quick word on am, down 2.7% the low of the day, now down just over -- now down less than 2%. as for oil, having its steepest drop in three months it is currently off by $1.87 at 86.78. get more with sharon epperson. >> haven't seen prices like this, mandy, since july for
crude oil at least. the fact we saw the steep drop has a lot to do with the fact the dow is at the lowest levels since june as well. highly correlated with stocks today and the sentiment shift is significant in the oil market. not only crude oil prices that are lower but seeing petroleum prices lower across the board a key component of this is gasoline. gasoline few. chaurs four-month low, down about 2% today. and that means it's good news for drivers. we are looking the price at the pump come down some places, ohio, oklahoma, missouri, paying below $3.25 a gallon a lot more on cnbc.com. >> thank you very much, sharon. also a lot more right now. let's talk those gas price, got steven shork, editor of the shork report. oil price, gasoline prices are coming off. maybe you could say due to bad things such as the slowing economy or slowing global economy, at the same time, let's look at the silver lining, how much further do you think gas prices are going to fall for us? >> absolutely a good silver lining right now.
certainly with the selloff we are seeing in the oil prices will translate into lower gasoline prices in the weeks ahead. now, it's important to keep in mind what we are seeing now very normal. we are at a time of the season where retailers can sell winter grade gasoline, therefore, their access to a greater supply of oil has increased and that helps to lower the price. so, we do normally see a down tick in gasoline prices at this time of the year. now, i think what really is highlighting what we've seen recently is in september and at the beginning of this month, we saw counter cyclical ride higher in gas prices. so, what we are doing now ex-er exorcising that out of the market. it is important to keep in mind once we get to the holidays, prices will start to move higher again p. >> the next few weeks are kind of important, right? let's think about key event that
falls during those three weeks, the election. do you feel gasoline prices continue, particularly in the swing states, that that is going to help unkincumbent in the whi house? >> a drop in prices would help obama administration. i'm a little skeptical how much it could help. keep in mind, prices around 3.67. another 10, 15 crept does come out between now and the leeks. look that only gets us on a national average back around $3.50. from a historical standpoint, is i'll very high price, much higher, nearly twice as much as where prices were when the electorate went to the polls four years ago. so certainly lower prices can help but i can't imagine it being -- if you were on the fence, i can't imagine 3.50 swaying you in either direction politically. >> steven, i'm confused why oil isn't at $100 a barrel given all the sort of finger pointing and saber rattling in the debate last night both candidates at
iran. >> right. that is a clear signal. when you have an event that you think should move the market in a certain direction, ie rhetoric with regard to the middle east, tension, look, iran was probably responsible for assassinating the lebanese official last friday. any time you get that kind of news that you would think should propel the market higher and the market doesn't react, well, that's pretty good tell tale that the bulls have run their course at this point. but keep in mind the middle east, geopolitical tensions, driving prices higher just two weeks ago, never far from the surface. therefore, if you do get some sort of conflict, tomorrow, mention week, whenever, we can certainly run that risk. but from a purely -- >> but steven, steven, is it -- is it a tell tale that iran is powerless, that they have to sell their oil? they can say anything they want. their economy is in shambles. we know they have got to sell their oil regardless? >> oh, absolutely. i wholeheartedly agree with that. look, they just came out today, threatening that they were going
to cut off their exports. please. not going to. they need the cash. but the concern as it was two tuesdays ago when the bills started flying between turkey and syria, keep in mind, syria is a surrogate of iran. now we have tensions with lebanon, israel's neighbor. lebanon is a surrogate of syria which is a surrogate of iran. not necessarily a question of the iranians holding back their oil but the fear is some sort of conflict that would disrupt their flow. that is the black swap, the long-tail risk event out there, a possibility but left in and of itself, demand, supply, oil prices headed lower makes a lot more sense at this point in the season. >> got t thank you so much for joining us today. >> all right. well, is the blue chip bubble bursting right before our eyes? brian has a theory on this and who the big winner will be. that's coming up next. [ male announcer ] this is steve.
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bubble, and is it bursting before our eyes? let's bring in barry james and dan genter. of course, brian sullivan is joining us co-hosting from california. dan, let me get to you first of all. what would you say? are we seeing a bubble bursting, or is this maybe just an overdue pull back? >> well, mandy, i think that it's an overdue pullback. the reality is we've had a little bit of a bubble we've eradicated from the marketplace. we moved up 13% off of where we were at the end of june. it was being pushed by macros. also, better news coming out of the ecb. it just didn't have foundation. it didn't have legs. there wasn't enough strength to hold it there. now what we're seeing is what we're going to have to live with is what we're getting from earnings. there's really no surprise here that earnings are slowing. we were going to get very, very cautious guidance. so i think people are maybe coming to that realization that we're a little bit ahead of ourselves at the p.e. range,
pushing at 14. it's probably just not strong enough earnings to get us out of the mud. >> i think you hit the nail on the head when you were talking about guidance. we have a lot of the tail wind in the rearview mirror. qe-3 announcement, ecb's moves, et cetera. a little murky in terms of guidance. do you think that's being priced? or do you think we have a lot further to the downside to go? >> no, i don't think we have a lot further. we have a lot of support at around 1317. i think the real key here is valuations. this market has been very consistent for four years. it wants to trade in a 12 to 14 p.e. it was up to 1309. right now it's about 1302. probably stabilize, maybe come back more. frankly, i think it's a position for people who have been sitting in the sidelines in cash that
got left behind to put a little money to work. >> brian, you want to jump in? >> yeah, is this the market pricing in in a re-election? >> i think what you have, brian, is to some degree it could be pricing it in. i think if obama's re-elected, probably valuations stay stuck and mired in this range. so it's going to be a 13 p.e. market. if romney is elected, things won't change overnight, but we can probably hold a higher valuation. >> barry, if i think taxes are going to go up, i'm going to dump the winners. i'm going to dump the stocks that are higher. i'm going to dump the blue chips. >> yeah, you're looking at the top rates going up on capital gains, almost 50% and dividends going up almost 200% if those do come into play. so that is going to have an
impact. people haven't factored that in. i've looked at the numbers and where the markets could go. it could be a 10% move based on that alone. but people are waiting for the election. maybe they're trying to jump the gun a little bit right now in front of that. we've had this nice run. we've only had about a quarter of it in terms of a pullback. the earnings are growing at less than 1%. we're likely to have some type of contraction in the economy in the next year. that's typical the year after election. a slow down is not unusual. we've had a bifurcated market as well. a few sectors really running. the generals have been leading the way, and the privates haven't. so that's the thing that we need to see. the other side we've seen that's kind of disturbing to us, thinking that a correction could be possible, is that more expensive stocks have been running and the very, very cheapest stocks have actually been going down this year. very, very unusual. it could be an indication we should have some form of correction in the market. >> okay. barry, dan, thank you very much.
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earnings, strong dollar, and the fear that bernanke's not going to be there forever. let's get out now to brian sullivan for the wrap-up of the apple event of the day. brian. >> yeah, you know this is a very special "street signs" wrap-up because we made something called "the graphic." try to visually display everything we've talk about. it has been a hectic few hours. the ipad mini, price start at $329. will that prove to be too expensive? not according to our buddies nick and brian here. bill and ted also said they'd buy one. faster fourth generation ipad, same price. new 13-inch imac with a crystal display. the concern is on the ipad sales rate for the third quarter. that's why the stock is down. but we're here, and that's what we've done. that's what they unveiled here in san jose. the most bus heavy city in the america. >>